- Disney throws an incredible number of people at things ... It felt like Mexico at times ... Like labor was "free"... tons more then most other places I have been in the US. The key take-away I had was reminding me that cost doesn't matter value does. In fact it felt like Disney is probably 10x the cost per ride but gets 20x the visitors.
- Quality ... the little details mater a lot and distinguish the best from the rest. This is very similar to Apple. The last 2% takes a lot of effort but when done consistently delivers. For example, any ride under construction had huge painted canopies over it that from a distance made it look like a building ... you didn't see construction. Another is how they did line management on the rides ... I haven't been to a lot of amusement parks, but Disney seemed 10x better here and the hard thing to believe is that this is easy to copy. I don't get why others don't ... It is that last two percent that makes the difference.
- Business lines play off each other ... This also reminded me a lot of Apple. Everything was about Disney ... Shows, characters, rides all pushed Disney movies, TV, etc. My wife and I found ourselves saying "Oh we should watch ___ Disney movie" multiple times. When business lines are synergistic that is when real value happens. As a side it took Disney many years to get there (as it is with Apple) so this isn't something done overnight, but there should be a vision for making this happen.
- What you call things matters ... Disney called the same spinning kid ride Aladdin's magic carpet, dinosaur spin and Dumbo's flying elephant (the only difference in the rides seemed to be what you where sitting in). Yet somehow this seemed like three magical rides that people lined up for and my kids loved. Further the local park has a very similar ride that is just called spinning something (I cannot remember the name) and has plain carts and no line. Again Apple does this really really well ... Think iPad 2 launch "we reinvented the iPad just one year latter". If you say it strongly enough and believe it, it becomes "true".
Saturday, December 3, 2011
Disney Business Lessons
I recently spent a week in Disney World with my family. We had a great time taking in the sites and visiting all four theme parks. During my visit I had several thoughts about what makes Disney so successful to apply to my business.
Monday, June 7, 2010
Follow the Money - Why is AT&T changing their price
On June 7th, AT&T announced that they are removing the unlimited data plans option for new iPhone subscribers, which forces subscribers to choose a tiered pricing plan. There are some discrepancies in the published information on why AT&T is doing this.
To review AT&T’s decision to change to tiered data plans, let's follow the money. For simplicity, let's take a sample of 100 iPhone subscribers. Today AT&T makes $30 for unlimited data or $3000 per 100 subscribers. According to AT&T, approximately 60% of iPhone users use under 200 megs per month. With the new data plans in place, users will pay $15 per month for this tier. AT&T claims only 3% of smartphone users use more then 2gigs, which would cost those users $25 per month with the new tiered data pricing. These numbers include all of AT&T’s smartphones. I wonder how different the numbers would be if they were applied to iPhone customers specifically.
To further the example, let’s say these 3% end up using 5 gigs or $25 for 2 gigs plus $10 per gig overage charge or $55 per month. With the new pricing per 100 subscribers, AT&T would make $1,990, which is just over $1,000 less than the current unlimited pricing plan.
($15/month for 200 megs * 60 users) + ($25/month for 2 gigs * 37 users) + ($55/ month for 5 gigs * 3 users) 165 = $1,990
This example doesn't take into account overage charges, increased subscriptions because of a lower price point, or people paying for a higher level plan than they need due to fear. Even with these potential additional costs, it seems unlikely that AT&T will make up the lost revenue from the unlimited plan. So why is AT&T making this change?
My theory is two-fold.
First, iPhone users use significantly more data then any other smartphone which means AT&T's network is being hit hard. How much is it costing AT&T to upgrade their network? If network upgrades would cost more than the lost revenue, the entire expense is justified.
Second, what is the rate of increase of traffic? My guess, although AT&T hasn't affirmed, is that the rate of iPhone users data usage has increased significantly. I would assume that the longer a user has their iPhone, the more their data usage increases. In theory, AT&T is willing to loose a little short-term revenue to save money on building out their network. As a result, they are responsible for setting the precedent of data costing per usage so they don't have the average iPhone user using 2 gigs instead of 200 megs. Having every phone user watching Netflix on their phones must worry AT&T a lot.
So what does this mean? AT&T benefits from tiered data plan pricing because they will not have to upgrade their network as fast to accommodate new iPhone subscribers. Overall, this will negatively impact innovation. Users behavior will change. When data usage is limited, people spend less out of fear of hitting or exceeding the limit. As a result, users will be hesitant to download the latest app, use Pandora or browse the web. This will hurt the growth of new services and expanded choice for every member of the mobile community. My fear is that this change will delay the explosion of mobile as a real platform by a few years or more. I hope Verizon doesn't follow suit and remove unlimited data plans.
I would have loved to have been a fly on the wall when AT&T told Steve Jobs, CEO of Apple, about the new data plans. I believe that Steve Jobs is very much against this rate change. Apple makes money on people using the network - apps, music, etc. Increasing the cost to gather more data will undoubtedly decrease use, which will negatively impact Apple’s bottom line. Perhaps, this will drive Apple to escape their current exclusive contract with AT&T.
Finally, last year in my home town of Rochester, NY, Time Warner Cable attempted to institute rate caps. The community petitioned the change and strongly encouraged Time Warner to rethink their decision. Why are these same people not complaining about AT&T doing what in essence is the same thing? Instead, the same people are saying, “wow I will save $5 or $15 per month depending on the plan I choose.” Overall, AT&T is willing to take the long-term view and consumers aren't. AT&T wins?
To review AT&T’s decision to change to tiered data plans, let's follow the money. For simplicity, let's take a sample of 100 iPhone subscribers. Today AT&T makes $30 for unlimited data or $3000 per 100 subscribers. According to AT&T, approximately 60% of iPhone users use under 200 megs per month. With the new data plans in place, users will pay $15 per month for this tier. AT&T claims only 3% of smartphone users use more then 2gigs, which would cost those users $25 per month with the new tiered data pricing. These numbers include all of AT&T’s smartphones. I wonder how different the numbers would be if they were applied to iPhone customers specifically.
To further the example, let’s say these 3% end up using 5 gigs or $25 for 2 gigs plus $10 per gig overage charge or $55 per month. With the new pricing per 100 subscribers, AT&T would make $1,990, which is just over $1,000 less than the current unlimited pricing plan.
($15/month for 200 megs * 60 users) + ($25/month for 2 gigs * 37 users) + ($55/ month for 5 gigs * 3 users) 165 = $1,990
This example doesn't take into account overage charges, increased subscriptions because of a lower price point, or people paying for a higher level plan than they need due to fear. Even with these potential additional costs, it seems unlikely that AT&T will make up the lost revenue from the unlimited plan. So why is AT&T making this change?
My theory is two-fold.
First, iPhone users use significantly more data then any other smartphone which means AT&T's network is being hit hard. How much is it costing AT&T to upgrade their network? If network upgrades would cost more than the lost revenue, the entire expense is justified.
Second, what is the rate of increase of traffic? My guess, although AT&T hasn't affirmed, is that the rate of iPhone users data usage has increased significantly. I would assume that the longer a user has their iPhone, the more their data usage increases. In theory, AT&T is willing to loose a little short-term revenue to save money on building out their network. As a result, they are responsible for setting the precedent of data costing per usage so they don't have the average iPhone user using 2 gigs instead of 200 megs. Having every phone user watching Netflix on their phones must worry AT&T a lot.
So what does this mean? AT&T benefits from tiered data plan pricing because they will not have to upgrade their network as fast to accommodate new iPhone subscribers. Overall, this will negatively impact innovation. Users behavior will change. When data usage is limited, people spend less out of fear of hitting or exceeding the limit. As a result, users will be hesitant to download the latest app, use Pandora or browse the web. This will hurt the growth of new services and expanded choice for every member of the mobile community. My fear is that this change will delay the explosion of mobile as a real platform by a few years or more. I hope Verizon doesn't follow suit and remove unlimited data plans.
I would have loved to have been a fly on the wall when AT&T told Steve Jobs, CEO of Apple, about the new data plans. I believe that Steve Jobs is very much against this rate change. Apple makes money on people using the network - apps, music, etc. Increasing the cost to gather more data will undoubtedly decrease use, which will negatively impact Apple’s bottom line. Perhaps, this will drive Apple to escape their current exclusive contract with AT&T.
Finally, last year in my home town of Rochester, NY, Time Warner Cable attempted to institute rate caps. The community petitioned the change and strongly encouraged Time Warner to rethink their decision. Why are these same people not complaining about AT&T doing what in essence is the same thing? Instead, the same people are saying, “wow I will save $5 or $15 per month depending on the plan I choose.” Overall, AT&T is willing to take the long-term view and consumers aren't. AT&T wins?
Sunday, September 27, 2009
Sharing Information
Death! We all die and when that happens we cannot take anything with us. I have been pondering these thoughts recently as a clean out my Mom's house and finally get to reviewing many of my fathers files (he died over 10 years ago). My father was a very private man - he shared thoughts and ideas very tentatively, always worried someone would take them. He developed some incredible theories on business cycles (see enginesofprosperity.com which he never published). I now have about 40 boxes of his research on the history of the stock market and don't know what to do with them. Because he didn't share his work with anyone, there is no one who can carry on his work and finish it.
So what is the purpose of not sharing ideas? If we keep things close to us we aren't able to bounce them off of other people and get input. We aren't able to be introduce to others with a similar passion who we could collaborate with. If we don't share, when we die one of two things will happen: either our work will be destroyed - since no one knows enough to save it or our work will provide torment to our children - they want to preserve our legacy, but at the same time they don't know what to do with what we created.
If we do share what are we risking. Someone can miss-understand, miss-quote what we are talking about or take it out of context and manipulate our words. Or worse someone can steal what we have done and claim it as their own. However, I have come to see these as excuses and the biggest reason people don't share is the risk of being exposed and the fear of critique - you cannot get "hurt" if you never share anything.
Technology is profoundly effecting this equation of when and how to share. Technology today makes connecting with other people who hold similar passions much easier. It allows us to share ideas and have them credited to us in ways that were hard to do previously. Technology is changing the equation for sharing so that it is more heavily favoring being open.
It doesn't come naturally for me to share due to my upbringing. But the more I consider the alternatives, the more I push myself to share. I continually say what is the worst thing that can happen - after realizing that this isn't that bad I go ahead and share.
Mankind is becoming increasingly open and more and more people are realizing that sharing is much more powerful than not sharing - just look at Facebook and Twitter. This sharing will propel the next growth of knowledge. Our future is incredible. We are truly on the verge of the Coming Digital Age.
So what is the purpose of not sharing ideas? If we keep things close to us we aren't able to bounce them off of other people and get input. We aren't able to be introduce to others with a similar passion who we could collaborate with. If we don't share, when we die one of two things will happen: either our work will be destroyed - since no one knows enough to save it or our work will provide torment to our children - they want to preserve our legacy, but at the same time they don't know what to do with what we created.
If we do share what are we risking. Someone can miss-understand, miss-quote what we are talking about or take it out of context and manipulate our words. Or worse someone can steal what we have done and claim it as their own. However, I have come to see these as excuses and the biggest reason people don't share is the risk of being exposed and the fear of critique - you cannot get "hurt" if you never share anything.
Technology is profoundly effecting this equation of when and how to share. Technology today makes connecting with other people who hold similar passions much easier. It allows us to share ideas and have them credited to us in ways that were hard to do previously. Technology is changing the equation for sharing so that it is more heavily favoring being open.
It doesn't come naturally for me to share due to my upbringing. But the more I consider the alternatives, the more I push myself to share. I continually say what is the worst thing that can happen - after realizing that this isn't that bad I go ahead and share.
Mankind is becoming increasingly open and more and more people are realizing that sharing is much more powerful than not sharing - just look at Facebook and Twitter. This sharing will propel the next growth of knowledge. Our future is incredible. We are truly on the verge of the Coming Digital Age.
Tuesday, September 8, 2009
Sharing Family Memories
My Mom just moved into assisted living (she has late stage Alzheimer) and my brother, sister and I are cleaning out her house. Of course there is a lot of sentimental stuff and some of that comes from my grandparents house. We divided up what we wanted and then used technology to do the rest - we took pictures of things and sent them to all of our relatives asking what they wanted. A quick snap with the iPhone and posting to Flickr and we had a quick gallery of stuff that could easily be emailed out to family to see if they wanted anything.
We are getting pretty sick of going through all of this stuff and without technology I am sure we would have just thrown away or sold the stuff we didn't want.
Think how technology will allow us to do this task when my kids are cleaning out my house? Digitally tagging items each kid wants. 3D pictures and interactions. What other interesting technologies will make the job of cleaning out your parents house easier? It sure is a pain in the neck today - you struggle between wanting to throw things out and remembering the sentimental value of stuff that just cannot fit into your house. Ahh, now I understand why the storage business does a thriving business and probably will in the future.
We are getting pretty sick of going through all of this stuff and without technology I am sure we would have just thrown away or sold the stuff we didn't want.
Think how technology will allow us to do this task when my kids are cleaning out my house? Digitally tagging items each kid wants. 3D pictures and interactions. What other interesting technologies will make the job of cleaning out your parents house easier? It sure is a pain in the neck today - you struggle between wanting to throw things out and remembering the sentimental value of stuff that just cannot fit into your house. Ahh, now I understand why the storage business does a thriving business and probably will in the future.
Monday, August 31, 2009
Technology to the Rescue
This last weekend I rented a truck to drive back stuff (ok junk - no really some of it is nice) from my Mom's house which we just sold. I had a "great" customer service experience which makes me wonder why technology isn't being better used in 2009. Here is the story:
I ordered a truck from U-Haul with a week to spare. No problem right. Well U-Haul called to confirm the day before and said I had to drive an hour and a half to pick up my truck. I didn't like this answer - they had a week of notice to arrange their trucks, but I guess having customers drive long distances is much cheaper for them. So I called around to find a better location. I finally found Penske based on my sisters recommendation that had a truck 5 minutes down the road available the next morning. Great I was all set.
The next morning I drove to the truck rental location (not owned by Penske - a used car lot that rents trucks on the side). The person who is authorized by Penske to sell trucks wasn't there and there was no truck. I called Penske and said what is going on...after 20 minutes on hold I finally got a person who started looking into my problem. After 2 hours of searching for a truck (I never got a good answer as to what happened to my truck) and many conversations they finally found one somewhat close and available the next day (when I was planning on moving anyway).
It all worked out, I got the truck moved and got everything from my Mom's safely.
This really got me thinking ... why aren't the technology systems of these companies better? Why cannot they predict with better accuracy where a truck will be and why does it take someone two hours of calling each office to find out which have trucks and which are open on Sunday? Couldn't a simple (ok maybe not that simple, but these are big organizations with big IT budgets) database handle all this information and make looking this information up take 2 minutes instead of 2 hours? What is the cost of all of the employees spending 2 hours on the phone - let alone the cost of the customer aggravation and discounts (they did give me 50% off my truck rental rate for the hassle).
Technology is changing society, but even in 2009 it has a long way to go to really revolutionize every industry. It is coming though and coming faster than we all think.
I ordered a truck from U-Haul with a week to spare. No problem right. Well U-Haul called to confirm the day before and said I had to drive an hour and a half to pick up my truck. I didn't like this answer - they had a week of notice to arrange their trucks, but I guess having customers drive long distances is much cheaper for them. So I called around to find a better location. I finally found Penske based on my sisters recommendation that had a truck 5 minutes down the road available the next morning. Great I was all set.
The next morning I drove to the truck rental location (not owned by Penske - a used car lot that rents trucks on the side). The person who is authorized by Penske to sell trucks wasn't there and there was no truck. I called Penske and said what is going on...after 20 minutes on hold I finally got a person who started looking into my problem. After 2 hours of searching for a truck (I never got a good answer as to what happened to my truck) and many conversations they finally found one somewhat close and available the next day (when I was planning on moving anyway).
It all worked out, I got the truck moved and got everything from my Mom's safely.
This really got me thinking ... why aren't the technology systems of these companies better? Why cannot they predict with better accuracy where a truck will be and why does it take someone two hours of calling each office to find out which have trucks and which are open on Sunday? Couldn't a simple (ok maybe not that simple, but these are big organizations with big IT budgets) database handle all this information and make looking this information up take 2 minutes instead of 2 hours? What is the cost of all of the employees spending 2 hours on the phone - let alone the cost of the customer aggravation and discounts (they did give me 50% off my truck rental rate for the hassle).
Technology is changing society, but even in 2009 it has a long way to go to really revolutionize every industry. It is coming though and coming faster than we all think.
Thursday, August 6, 2009
Technology Illiterate
Recently, I heard a great story today from a friend. According to my friend, his business partner is "technology illiterate". After a recent vacation his partner told him that he had filled the memory card on his digital camera and so he bought a new one. My friend asked if he had downloaded the pictures to his computer to free up the card? His partner said, "No. I just buy a new memory card each time it is full."
As the rate of technology change becomes faster (information is already doubling every 2 to 3 years and the rate of change is increasing) how many more people will fall into this "technology illiterate" category? Aren't all of us technology illiterate in some areas? We cannot know everything. I myself find that if I haven't fixed my computer for a few years (they are getting more stable really: -) then I forget the basic things to check first that use to come second nature.
What is the answer to technology overload? How can we function in a world that is changing at an incredibly fast rate?
All of these questions lead to opportunities to develop simpler more elegant solutions that people can use. How is your company handling information overload? Do you have plans for the future and know how technology might effect you and your business? If not you should.
As the rate of technology change becomes faster (information is already doubling every 2 to 3 years and the rate of change is increasing) how many more people will fall into this "technology illiterate" category? Aren't all of us technology illiterate in some areas? We cannot know everything. I myself find that if I haven't fixed my computer for a few years (they are getting more stable really: -) then I forget the basic things to check first that use to come second nature.
What is the answer to technology overload? How can we function in a world that is changing at an incredibly fast rate?
All of these questions lead to opportunities to develop simpler more elegant solutions that people can use. How is your company handling information overload? Do you have plans for the future and know how technology might effect you and your business? If not you should.
Wednesday, July 15, 2009
The Great Horse Manure Crisis
Our cities cannot expand. The smell is terrible, and the health crisis even worse. There isn't enough space and there is no solution in sight.
What year do these statements describe?
1900. In 1900 there was a crisis. How do you deal with horse manure? It is hard to fathom today, but in 1900 there were 100,000 horses in New York City and each horse produced about 20 lbs of manure a day - right on the city streets. What could be done to solve this problem? Estimates were that in London, within 20 years horse manure would be 7 feet deep on every street. Experts of the day could find no solution....to grow required more horses and more horses need more food and stables and yes, there is more manure to cleanup.
Today it is equally hard for us to see the changes that digitization will bring to our society and businesses. We are stuck in the horse thinking and need to break out of it to think differently - thinking about how digitization will effect all of us. We are at a point of change equal to that experienced by what the automobile did to the horse manure crisis. Is your business prepared? Are you thinking about what digitization will do to you and your company? We have only seen the tip of the iceberg of the effects of digitization. Hold on to your seat belts it is going to be an awesome ride.
What year do these statements describe?
1900. In 1900 there was a crisis. How do you deal with horse manure? It is hard to fathom today, but in 1900 there were 100,000 horses in New York City and each horse produced about 20 lbs of manure a day - right on the city streets. What could be done to solve this problem? Estimates were that in London, within 20 years horse manure would be 7 feet deep on every street. Experts of the day could find no solution....to grow required more horses and more horses need more food and stables and yes, there is more manure to cleanup.
Today it is equally hard for us to see the changes that digitization will bring to our society and businesses. We are stuck in the horse thinking and need to break out of it to think differently - thinking about how digitization will effect all of us. We are at a point of change equal to that experienced by what the automobile did to the horse manure crisis. Is your business prepared? Are you thinking about what digitization will do to you and your company? We have only seen the tip of the iceberg of the effects of digitization. Hold on to your seat belts it is going to be an awesome ride.
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